Sunday, May 17, 2015

Why Marketing-Sales "Alignment" Is No Longer Enough

Marketing and sales alignment has been a hot topic for most of the past decade. Over the past ten years, many B2B companies have made marketing-sales alignment an important business priority, and some companies have made progress in improving the relationship between their marketing and sales teams. In a survey of marketing and sales professionals published earlier this year by Callidus Software, 72% of respondents said their marketing and sales teams are fully or somewhat aligned.

Despite the progress, however, the methods typically used to coordinate marketing and sales activities are not adequate to optimize demand generation performance in most B2B companies. The conventional approach to marketing-sales alignment usually involves some version of three steps:

  • Marketing and sales jointly describe the stages of the buying process and identify the characteristics of a "sales-ready lead."
  • The company implements some form of lead scoring system that will disclose when a lead has become sales ready. according to the agreed-upon definition.
  • Marketing and sales agree on the process for transferring a lead from marketing to sales. Some companies use a formal service level agreement that spells out what information marketing will provide to sales and what actions sales will take when a lead is transferred.
So, the traditional tactics used to improve marketing-sales alignment are primarily designed to optimize the "hand-off" of leads by marketing to sales. They deal with when the hand-off will occur and how it will be executed. The metaphor that's often used when discussing marketing-sales alignment is a relay race, where one of the critical steps is to pass the baton from marketing to sales at the right time, in the right way.

The "relay race" model of marketing-sales alignment isn't adequate to support an optimized demand generation system. As Scott Brinker eloquently wrote in a recent post at the Chief Marketing Technologist blog, the conventional methods for improving marketing-sales alignment weren't "so much a breakthrough in alignment as much as a negotiated peace settlement between two countries who share a common border. Trade policy and border control were established, facilitating commerce between them, but they were not one nation under a common flag."

The main weakness in the traditional paradigm of marketing-sales alignment is that it doesn't match up with how potential buyers actually engage with companies during the buying process. In essence, the current incarnation of marketing-sales alignment is an imperfect attempt to compensate for the inherent shortcomings of a bifurcated, two-function approach to B2B demand generation.

The diagram below shows why the current model of marketing-sales alignment is inadequate. The bottom portion of the diagram shows the B2B buying process developed by SiriusDecisions. The top portion depicts the two fundamental types of interactions that potential buyers have with companies during the buying process.

This diagram illustrates that, in general, today's buyers rely primarily on content-based interactions in the early stages of the buying process and primarily on person-to-person interactions during the later stages of the process. The use of content-based vs. person-to-person interactions at each stage of the buying process will vary from company to company, and even from lead to lead. The important point is that most potential buyers will use both types of interactions throughout the buying process.

Most companies rely on marketing to develop content and to handle content-based interactions, and they rely on sales reps to handle person-to-person interactions. So, our diagram also shows the involvement of marketing and sales during the buying process. The diagram illustrates that both content-based interactions and person-to-person interactions can occur at any stage of the buying process. Therefore, to optimize demand generation performance, both marketing and sales need to be involved at every stage of the process.

Recent research has confirmed the need for both marketing and sales to be involved throughout the buying process. At its summit conference last week, SiriusDecisions unveiled the results of its 2015 B-to-B Buying Study. This research was based on the behaviors of 1,000 business executives. The study found that business buyers are interacting with sales reps more than 50% of the time in the earlier stages of the buying process.

A truly optimized demand generation system requires the marketing and sales functions to be fully integrated. It's not enough to have a "peace settlement" that manages border control and trade relations. Today's buyers expect their potential suppliers to speak with one consistent voice, and they expect everyone they deal with in an organization to know what interactions have already occurred and what information has been exchanged. This type of combined effort requires integrated capabilities.

The architect Louis Sullivan once said that "form" should follow "function." Marketing and sales are interdependent components of the demand generation process. Therefore, they should be in the same organizational unit for management, planning, and budgetary purposes.

Combining marketing and sales into a single organizational unit is a controversial idea. Some people argue that the two functions should not be combined because marketers and salespeople perform different activities and have different skill sets. The facts in this argument are accurate, but the argument itself is not persuasive. Many companies have a manufacturing process that includes diverse work activities and requires employees with different skills. Yet, most of these companies manage manufacturing within a single organizational unit.

Others argue that if you combine marketing and sales, one of the functions will suffer because the executive managing the combined operation will favor one of the functions over the other. If this occurs - and I don't doubt that it has - it is a failure of leadership, not an inherent flaw of the combination itself.

The integration of marketing and sales is a touchy political issue, and there is still a significant amount of cultural and political baggage that separates the two functions. However, the logic for combining the two has become compelling, and it's clear that we cannot optimize demand generation performance if we continue to manage demand generation in two functional silos.

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